Tesla, Panasonic Gigafactory OK'd for Producing Car Batteries

Tesla and Panasonic will construct a joint Gigafactory, the industry term for a large-scale battery factory, to supply the electric car manufacturer's most crucial components.

Forbes was among the first to report that the Gigafactory deal was imminent on Tuesday, and the companies released a joint press release on Thursday stating that "Tesla will prepare, provide and manage the land, buildings and utilities," while "Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval."

In total, the factory is projected to employ roughly 6,500 people by 2020 making 35GWh of lithium-ion battery cells and 50GWh of packs per year.

According to Forbes, "This is much as things work today, with the big change being that it will all happen under one roof."

JB Straubel, CTO and co-founder of Tesla Motors, explained that "the Gigafactory represents a fundamental change in the way large scale battery production can be realized. Not only does the Gigafactory enable capacity needed for the Model 3 but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications."

Yoshihiko Yamada, EVP of Panasonic, added that the Gigafactory and its manufacturing techniques would "accelerate the expansion of the electric vehicle market."

Bloomberg News reported that the factory could cost $5 billion by 2020, and that Panasonic's financial contribution is still being negotiated.

Tesla announced that it would deliver 35,000 vehicles in 2014, and reported delivering 6,457 in the first quarter, beating its target.